NEW YORK—One retired police officer who told the government he was too psychologically damaged to work ran a martial arts studio, prosecutors said. Another claimed his depression was so crippling it kept him house-bound, but he was photographed aboard a watercraft, they said. A third man who said he was incapable of social interactions manned a cannoli stand at a street festival.

All were wrongly receiving thousands of dollars in federal disability benefits, prosecutors said Tuesday in announcing a sweeping fraud case involving scores of retired officers, firefighters and jail guards. The retirees faked psychiatric problems, authorities said, and many falsely claimed their conditions arose after the Sept. 11 attacks.

More than 100 people were arrested, including 72 city police officers, eight firefighters, five correction officers and one Nassau County Police Department officer.

Four ringleaders coached the former workers on how to feign depression and other mental health problems that allowed them to get payouts as high as $500,000 over decades, Vance said. The ringleaders made tens of thousands of dollars in secret kickbacks, he said.

The four—retired officer Joseph Esposito, 64; detectives’ union disability consultant John Minerva, 61; lawyer and former FBI agent and suburban prosecutor Raymond Lavallee, 83; and benefits consultant Thomas Hale, 89—sat stolidly as they pleaded not guilty to high-level grand larceny charges. All were released on bail, ranging from $250,000 to $1 million.

Defense lawyers said the four staunchly denied the accusations, and some noted their clients had legitimate jobs helping people seek benefits. Minerva wasn’t “steering people or telling people what to say when they applied for those benefits,” said his attorney, Glenn Hardy.

Esposito’s lawyer, Brian Griffin, pointed out that, according to prosecutors, many of the benefit-seekers had been found eligible for city disability pensions before they got federal benefits.

But prosecutors noted eligibility for Social Security disability benefits is a higher bar – complete inability to work – than qualifying for a city worker disability pension. And they said the applicants strategically lied, with the ringleaders’ guidance, to make themselves appear to meet it.

The applicants were taught how to fail memory tests and how to act like people suffering from depression or post-traumatic stress disorder, and their applications were filled with strikingly similar descriptions – “my (husband or wife) is always after me about my grooming,” “I nap on and off during the day” – in what appeared to be the same handwriting, prosecutors said.

Esposito, advising one applicant preparing to meet with Social Security Administration officials, told her to make mistakes in simple spelling and math exercises, prosecutors said in court papers.

“You don’t have any desire for anything,” the papers quote Esposito as telling her, and “can you pretend you have panic attacks?”

If applicants claimed to be traumatized by Sept. 11, “they were instructed to say that they were afraid of planes or they were afraid of tall buildings,” Assistant District Attorney Christopher Santora told a judge.

Police Commissioner William Bratton said the arrests represented an effort to ensure “the memories of those who did, in fact, contribute their lives or their physical well-being to dealing with 9/11 are not sullied.”

Over 26 years, the workers arrested collected about $22 million in bogus benefits, authorities said, and more arrests could follow. Prosecutors estimate hundreds more people and as much as $400 million may be involved.

Among those arrested, former police officer Louis Hurtado taught martial arts in Odessa, Fla., according to his studio’s website, which touts the black belts he’s trained. In another photo, a smiling, tanned Glen Lieberman, a retired officer, gestures obscenely at the camera from aboard a watercraft. Online photos showed another benefits recipient, Joseph Morrone, smiling at the cannoli stand during a TV interview at the San Gennaro Festival in 2009.

Morrone pleaded not guilty and was released without bail. There was no answer at Hurtado’s listed number in Florida. The Associated Press couldn’t locate a home phone number for Lieberman.

The defendants said they couldn’t drive, shop or handle their finances, yet one piloted a helicopter and another played blackjack in Las Vegas, prosecutors said. One traveled to Indonesia and boasted on YouTube about his investment prowess, they said.

The president of the Patrolmen’s Benevolent Association, Patrick Lynch, said the union didn’t condone the filing of false claims but people shouldn’t forget “there are serious psychological illnesses resulting from the devastating work performed by first responders following the attack on the World Trade Center” and from police work in general.

Minerva has been suspended without pay from the Detectives’ Endowment Association, President Michael Palladino said.

The case started about five years ago when Social Security Administration investigators noticed a flurry of similar applications and realized a number of the applicants had gun permits despite claiming severe psychiatric problems on their benefits forms.

Claims of government workers feigning injury to get disability benefits have been the focus of sprawling criminal cases before.

Over the last two years, 32 people were arrested in a probe into Long Island Rail Road employees who collected federal railroad disability benefits; at least two dozen have pleaded guilty. Some of the workers claimed on-the-job injuries, only to be spotted later playing golf and tennis, working out and even riding in a 400-mile bike race.

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Reach Jennifer Peltz on Twitter (at)jennpeltz

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